Another year has nearly passed, and with it, trillions of dollars of global B2B spend.
And despite the fact that a chunk of those B2B payments are still estimated to be locked up in outstanding receivables and paper-based processes, the global B2B payments market was slightly different in 2023 than years prior — and it is shaping up for further transformations in the year to come.
That’s because the past year has witnessed a shift in the dynamics between buyers and suppliers, driven by innovative ways of doing business and changes in how payments are made and received.
These innovations are a big deal in the historically manually driven B2B payments space, and center around leveraging automated payment options designed to foster stronger business relationships, create a seamless payment experience and activate working capital efficiencies with digital and emergent solutions.
When it comes to digitizing the commercial payments ecosystem, solving for behavior and comfort with legacy methods is just as important as solving for technically capability.
But while the paper check is still around, its iceberg of inertia is steadily being melted by electronic payment methods, whose adoption is being spurred by macro factors like soaring interest rates and costs of capital, making firms across industries keener than ever to have money in hand as fast as possible.
The data-rich environments these new solutions create don’t hurt either, providing firms with the real-time insights and intelligent agility necessary to compete, and win, in today’s environment.
Read also: Death by Paper Cut: The Hidden Costs of Checks
The events of the past year have propelled businesses into an era of accelerated digital transformation.
Along with a renewed focus on the importance of cash in hand, organizations have been forced to rethink traditional approaches to B2B transactions as remote and hybrid work remained the norm — meaning fewer people in the office to sign and mail paper checks — and the adoption of digital tools and technologies designed to streamline processes, enhance communication and facilitate smoother transactions between buyers and suppliers surged.
Drew Edwards, CEO of Ingo Money, told PYMNTS that amid the current — and sustained — backdrop of higher-for-longer interest rates, “[there is a lot of interest] in the marketplace around the question of turning payments into a money maker as opposed to a cost center.”
Treasurers and other finance professionals, Edwards said, are weighing the costs of issuing and accepting paper checks versus other faster (and online) payment options such as virtual credit cards and push-to-card transactions.
As Corcentric CEO Matt Clark told PYMNTS in June, in the past, B2B payments were “somewhat of a staring contest,” where whoever “has the biggest stick makes the other party conform to the way they want to do it — which is not sustainable and causes a lot of pain and migraines for organizations.”
More like this: New B2B Tech Reshapes Buyer-Supplier Dynamics While Unlocking Working Capital
“As 2024 dawns, we’ll likely see an increasing number of providers broaden their payments services for buyers to help hasten the shift away from the paper check,” Chris Wyatt, chief strategy and product officer at Finexio explained to PYMNTS. He projected that the use of virtual cards will proliferate and be tied to enterprise resource planning (ERP) and accounting software so that reconciliation is automatic and error-free.
Increasingly, today’s B2B dynamics are being reshaped by evolving expectations around convenience, cost and flexibility as firms realize they can shop around and tap digital marketplaces to find the best fit for their needs.
Generative AI is also playing a role. The automation of administrative tasks like autofill and reconciliation reduces the potential for human error, leading to smoother and more trustworthy transactions.
And personalization is becoming more relevant as organizations strive to keep their best customers happy, while attracting new ones.
See also: The Trickledown Consumerization of B2B Payments Helps Firms Win Business
As the consumerization of the payment experience trickles down to commercial transactions, in part due to advances in technology and in part due to a behavioral shift as younger generations rise into key decision-making roles, B2B buyers and sellers are becoming more “human” — and expecting to find the digital conveniences they are used to in their consumer lives within their business experiences.
“In a B2B business, the finance function itself is part of the customer experience,” Aanchal Kochhar, head of product at Capital One Trade Credit, told PYMNTS this month. “You can delight customers and capture more customers when underwriting is seamless, the credit process is seamless, and how money flows is seamless and with less error. There is a lot of growth potential.”
“In general, business customers are no longer accepting of the clunky manual processes long associated with B2B accounts receivables,” Shawn Cunningham, managing vice president and head of Capital One Trade Credit at Capital One, told PYMNTS.
Companies that trust each other are more likely to commit to repeat business, leading to a consistent and stable revenue stream.
PYMNTS Intelligence finds that nearly nine in ten retailers (89%) that make commercial payments using real-time innovations say they have built stronger buyer-supplier relationships, and 76% of those that receive such payments say the same, according to “Corporate Changes in Payment Practices: The Retail Industry is Ramping Up Real-Time Payments,” a collaboration between PYMNTS and The Clearing House.
“This is the first generation of digital natives,” Jacqueline White, president at i2c, told PYMNTS, “and they prefer digital payment methods over traditional ones.”
As 2024 nears, innovation within the B2B payment ecosystem is increasingly focused on creating win-win situations across either side of the transaction, not waiting for the paper check to arrive and the funds to hit the corporate account.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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